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    Published on: December 8, 2011

    This commentary is available in text and video form. The content is similar, but not word-for-word. Enjoy both, or either...

    Hi, I’m Kevin Coupe and this is FaceTime with The Content Guy.

    The other day I called up Michael Sansolo and he asked what I was doing. (We only talk like three or four times a day.) I told him I was at the bicycle shop, where I was getting my bike fixed. He asked me what was wrong with it, and I told him it was just a flat tire.

    Michael said that he actually was proficient at fixing flat bicycle tires, and he scoffed at my having to bring it into a store to get it fixed. “How much did it cost?” he asked.

    Ten bucks, I said.

    He paused.

    “Y’know, I may know how to fix a flat bike tire, but it is a real pain in the neck. For just ten bucks, I would have the store fix it, too.”

    Score one for the technically incompetent Content Guy.

    But what this conversation really made me think about was the notion of value.

    Think about it. It wasn’t worth it for Michael to fix his own bike tire if it only cost ten bucks for someone else to do it. I didn’t ask him, but it would be interesting to know where he would draw the line - $11? $12? $15? $20? Clearly, he would draw the line in a different place than I would, because he knows how to change one. It would take me forever to do it, and I’d make a mess of it, so I’d probably spend a lot more than $10 to get it done right.

    That’s why I belong to AAA. I know how to change a car tire, but they are a lot better at it than I am, and so it is worth the wait for them to come do it - especially these days, when I always have a cellphone and my iPad to keep me company, and there’s usually a Starbucks somewhere nearby. I don’t really do it consciously, but I factor in my time, my lack of expertise, their greater abilities, the cost of a AAA membership, and add it all up...and it always makes sense to call AAA rather than do it myself.

    But as I say, other people would make a different calculation and come up with a different answer. We all see value differently.

    Now, let’s think about this in terms of another discussion we often have here on MNB - online shopping vs. patronizing brick-and-mortar stores.

    This usually comes up in the context of online sales taxes, or some other story, but there are folks out there who will argue that online shopping is inherently wrong because it hurts local merchants and destroys local economies.

    But I would argue that there is no objective value difference between shopping at locally owned store and shopping online. Just as I would argue that there is no objective value difference between reading a newspaper online or in print form, or reading a physical book or one on my iPad or Kindle. No objective value difference at all.

    There is, however, a subjective value difference - and these are value decisions that consumers make every moment of every day. They choose one over another because of price or convenience or selection or quality ... and even sometimes because they want to support a local merchant. But these are all subjective value judgements, unique to each of us because of our lives and our priorities. Just like deciding who is going to change that tire.

    I also would suggest that for brick-and-mortar retailers to effectively compete with online retailers, one of the things they have to do is make very sure they a) understand their own core value equation, and b) know whether it is valued by enough customers in their markets. That means knowing as much as possible about who is shopping in their stores, and what they are buying, and how often, and how they perceive the experience. That’s something that online retailers - think Amazon and Zappos - are very, very good at. The moment you discover that what you value is not so valuable to X percentage of your customer base, that’s time to rethink your core value offering. Because at that moment, there is a disconnect that can be fatal to your business if you don’t address it quickly. (Actually, I think that you have to be so on top of the situation that it never gets to this point, which could in fact be a point of no return.)

    It is a mistake to think, as so many brick-and-mortar retailers do, that once e-tailers have to collect sales taxes, all their advantages will go away. I firmly believe that most of the good and great ones have long known that this day is coming, and they are fully prepared for it. They think that any competitive advantage connected to not paying sales tax is relatively small, and they almost certainly believe that they have a more intimate knowledge of what the consumer values than most brick-and-mortar retailers do.

    Tires are funny things. If they are inflated to the right pressure, they make the ride go easier. But if not, they actually can work against you. They go flat, and they can really screw up a trip.

    Understanding the complicated notion of consumer value - and building businesses that cater to it - is like keeping your tires inflated to the right pressure. You can’t afford to let things go flat.

    That’s what is on my mind this Thursday morning. As always, I’d like to hear what is on your mind.

    KC's View:

    Published on: December 8, 2011

    The New York Times this morning reports on how daily deals sites like Groupon and LivingSocial are going beyond their practice of sending emails to subscribers, informing them of short-term discounts and offering a link that allows people to access those discounts.

    “Mobile apps are now erasing even that labor,” the Times writes. “Open the free apps, and the only remaining bit of work may be opening your wallet. The bonus: mobile software makes it easier to find deals when you’re actually in a position to capitalize on them.”
    KC's View:
    The Times story makes the point that some of these applications can be sort of clunky, but the broader message, it seems to me, is the ability of marketers to create relevant messages that get to shoppers at relevant times. This can be compelling.

    Had an interesting experience yesterday that demonstrated the power of the daily deal. Saw an email last evening from Groupon advertising a big discount on Tumi luggage. I wasn’t in the market for anything, but I love my new Tumi suitcase and so I clicked through to check it out ... and discovered that it was sold out. Even though I wasn’t shopping, I was disappointed ... and my first thought was that I need to check my Groupon and LivingSocial emails more often.

    Published on: December 8, 2011

    The Washington Post this morning reports that the US Food and Drug Administration (FDA) has agreed to decide by March 31, 2012, whether to ban bisphenol A (BPA), a chemical widely used in the liners of food containers that “a growing body of research” suggests could pose serious health risks to people repeatedly exposed to it.

    According to the story, FDA only agreed to make the determination as the result of a court settlement that came after it was sued by the Natural Re-sources Defense Council (NRDC) sued it for not evaluating BPA within a time frame established by law. As the Post writes, “The settlement forces the FDA to take a position on a chemical that’s been used for more than four decades to manufacture everything from the cans for liquid infant formula to the coating on grocery store receipts.”

    The NRDC cites research “that links BPA to reproductive problems, certain cancers and behavioral issues in children. In October, a government-funded study published in the journal Pediatrics suggested that BPA exposure in the womb could lead to behavioral problems in girls, including anxiety and depression.” The American Chemistry Council, which represents the chemical industry that makes BPA, continues to maintain that BPA is safe and, the Post writes, "complains that various state actions to restrict BPA use have confused people over the health risks. For instance, consumer fears prompted manufacturers of baby bottles and sippy cups to stop using the chemical in these products several years ago.”

    The Post notes that “Rep. Edward J. Markey (D-Mass.) is pressing ahead with legislation he authored that would rid BPA from all food and beverage containers.”
    KC's View:
    Dead chemical walking? I suspect so, just as I suspect that the interests of the American Chemistry Council are more wrapped up in business than in chemistry. (But then again, I concede that I would feel differently if the trade association agreed with me on this. Everything is subjective.)

    Published on: December 8, 2011

    The Washington Post reports that the Indian government has “suspended a plan to allow foreign supermarket chains such as Wal-Mart and Britain’s Tesco to operate in its burgeoning retail market,” a shift that would have allowed such companies to own majority interests in chains operating there.

    “The announcement is expected not only to deter foreign investment in Asia’s third largest economy but also to further weaken the image of a government already under fire for its inability to follow through on tough policy revisions aimed at boosting growth,” the Post writes.

    The current government had announced that it would allow foreign retailers to own the majority of shares in supermarket chains operating in India, but was met with “fierce opposition” from a number of political quarters - including some that threatened to burn down stores owned by foreign companies - that were concerned that it would do harm to millions of small retailers throughout the country.
    KC's View:
    That didn’t last long.

    Published on: December 8, 2011

    • Tesco seems to be following in the footsteps of its larger brethren, Walmart and Carrefour, by reporting sales stagnation in its home market.

    Bloomberg reported the story this way:

    “Tesco Plc, the U.K.’s largest supermarket chain, said domestic sales declined for a fourth straight quarter as increased joblessness and rising fuel and food bills weighed on consumer spending.

    “Revenue at U.K. stores open at least a year fell 0.9 percent, excluding fuel and value added tax, in the fiscal third quarter ended Nov, 26, Cheshunt, England-based Tesco said in a statement today. That was steeper than the median estimate of a 0.7 percent decline compiled by Bloomberg from seven analysts, and matched the second quarter’s drop.”

    Tesco recently launched a campaign promoting the equivalent of $750 million (US) in price cuts as a way of goosing its UK business, but it seems not to have worked in the last quarter.
    KC's View:
    As I said the other day, I’m beginning to think that “too big to succeed” may be getting up there with “too big to fail.”

    Published on: December 8, 2011

    Quad Cities Online reports that “customers at Hy-Vee Food Stores now can use aisle411, a mobile application that gives them a layout of the store and helps them find what they're seeking, down to the specific section of the aisle. The application, for iPhone and Android, as well as the Hy-Vee Foods iPhone application, takes in-store inventory data and floor maps, and makes them searchable and interactive.”
    KC's View:

    Published on: December 8, 2011

    The Wall Street Journal reports that Burger King Corp. has decided to install Coca-Cola’s Freestyle high-tech vending machine in all its company-owned locations, and will recommend that all its franchisees follow its lead.

    The Freestyle machine allows people to customize their soft drinks by mixing brands and flavors based on personal preference using an iPad-like touch screen, with more than 100 possible combinations. The unit currently is in 1,772 locations, and the Burger Ming announcement guarantees it 850 more. Burger King’s total US fleet is 7,250 strong, and so broad adoption of the Freestyle machine would be a huge “get” for Coke.

    According to the story, “Chains like Firehouse Subs and Five Guys Burgers & Fries have agreed to put the machine in all their restaurants this year, and Freestyle is being tested in some Wendy's Co. and McDonald's Corp. locations.”
    KC's View:
    I just checked with my 17-year-old daughter, who fell in love with the Freestyle machine earlier this year when I took her to a Fatburger in Redondo Beach, California. Her reaction - she hates Burger King, has no intention of ordering food there, but will go there to use the Freestyle machine when presented with the opportunity.

    Good lesson about the appeal of both technology and customization.

    Published on: December 8, 2011

    • The Chicago Tribune reports that Cargill Inc. is “voluntarily recalling a year's output of dog food under the brands River Run and Marksman due to high levels of aflatoxin,” described as “a toxic substance that can cause liver failure and death in dogs.”

    Bloomberg reports that Mark Kasier, the former chief marketing officer at US Foodservice when it was owned by Ahold, has been sentenced to three years and 10 months in prison for securities fraud.

    As the story notes, “Kaiser pleaded guilty in August to one count of conspiracy to commit securities fraud in connection with a scheme to inflate U.S. Foodservice’s financial results by about $800 million from 2000 to 2003 by booking promotional rebates as income,” an effort that earned him and other execs “substantial year-end bonuses.”
    KC's View:

    Published on: December 8, 2011

    Harry Morgan, a man who practically defines the term “character actor,” and who was so memorable as Col. Sherman Potter in the television version of “M*A*S*H,” passed away yesterday. He was 96.
    KC's View:
    Morgan joined “M*A*S*H” in 1975, after McLean Stevenson left the series (in what might be one of the boneheaded career moves of all time). Morgan made the transition seamless while adding both wry maturity and sure comic timing to the classic series.

    While Morgan probably is best remembered for his television work - he also starred with Jack Webb in a revival of “Dragnet” in the late sixties - it also is amazing how many terrific movies he was in over his long career - The Ox-Bow Incident, All My Sons, and The Big Clock, as well as two of my all-time favorite movies - High Noon and Inherit The Wind.

    Published on: December 8, 2011

    Got a number of emails the other day regarding our confluence of stories on Walmart trying to compete with Amazon online despite some cultural and infrastructure barriers, and Amazon’s new decision to offer a five percent discount to people using its smart phone price comparison application.

    MNB user Mark Raddant wrote:

    It seems to me WalMart is asking the brick and mortar employees to support on line business which many view as the competition for their very jobs.  On-line is to brick and mortar as WalMart was to local businesses, and many of their employees are very, very aware of this.

    They’d better figure out a way around this, or face online irrelevance.

    Another MNB user wrote:

    As for Walmart.com vs Amazon, I am an Amazon Prime member, so I get my orders delivered in 2 days. Yet, I have used Walmart Site to Store often, especially for larger items with free shipping to store or items that Walmart sells directly rather than buying through a 3rd party from Amazon who does not offer a great return policy. Having used site to store option at many Walmart stores I can vouch that the service is slowly getting better as they have redesigned the delivery counters to be at the front of the store rather than in the back in the receiving section and also given some training to their employees.

    Although $8B is only 2% of Walmart revenue, it is still $8B, not very long ago that is where Amazon’s revenues were till it reached that tipping point. Walmart has slowly started to figure out the shipping and delivery to home pricing which was key to Amazon’s success. It won’t be long before Amazon feels the pressure if they’re not feeling it already. This is all good for me as a consumer as I get better prices with more convenience.

    I have been shifting a lot of my grocery purchases online – split between Walmart and Amazon.


    MNMB user Jay Schafer wrote:

    The stories on Site-to-Store ordering are interesting. Have you ever tried Lowes' version of this?

    When I was shopping in a Home Depot recently, I remembered that I had seen a grill on sale at Lowes.com. While still in Home Depot, I pulled out my smart phone and ordered the grill. By the time I checked out at Home Depot and drove to Lowes, the grill was already in the locked cabinet at the front of the store- for items ordered online that are in stock at its stores, Lowes guarantees that they will be in the front of the store and ready for pickup within 20 minutes - and I was able to pick up the item quickly and without fuss, and without walking to the back 40 of the store.

    I have no connection to Lowes, but IMHO this is how to do Site-to-Store ordering well: position the ordered items up front, guarantee a maximum time from when the customer places the order to when it is ready, and generally make it easy for the customer. Lowes gets this, and it gets more of my money in return. If I could do my grocery and CPG shopping like this and pay roughly the same prices as retail, I would do so in a heartbeat.


    MNB user Andy Casey wrote:

    Sounds like this new Amazon moved is aimed squarely at Wal-Mart, particularly since WM excluded online stores from their price match guarantee earlier this year. The clear undertone is "WM won't match Amazon prices but we will beat theirs by 5%".  Pretty sure we can predict how this will turn out.

    It may be the very definition of what makes Walmart and Amazon.com different.

    And regarding the individual customer data that Amazon collects, one MNB user wrote:

    Seems to me that Amazon is about to have a much more nimble syndicated data offering to compete with the likes of IRI and Nielsen.




    We had a story yesterday about how one out of four Starbucks card purchases are now being made via its mobile application, which I confessed I’d never used. Which prompted a number of emails...

    MNB user Anjana Nigam wrote:

    You have to use the SBX mobile app! I have been using nothing else since it came out and see more people using it every day. It is instant, the moment you scan it updates your balance and keeps record of all your transactions, so you can figure out just how much you’re spending at SBX – too much in my case. You also have the reward stars adding up in the same app and every 15 drinks you get a free drink which I usually give to my kid to use for her $6 mega venti frappe- something something drink! It gets you free refills of coffee, ice coffee and tea/ ice-tea while you’re in the store, it also gets you premium milk and syrup shots just like the gold reward card. In addition it also tells you the nearest SBX and whether it is open, and gives you directions. You can even add funds directly by linking your credit card….and SBX sends you many freebies as a result of using this app.

    What could be better for a coffee addict!


    Another MNB user chimed in:

    I’ve been using the Starbucks mobile app since it came out and I love it. It’s convenient and easy to use. Plus, it has the added bonus of stiffing banks out of a swipe fee. Makes me smile every time I use it. Seems to me like more retailers could avoid fees and increase profits through a similar app.

    Okay. I used the app yesterday. I loved it. And the guy at Starbucks said that his store gets a lot more than one out of four people using it.

    There is apparently one downside, according to an MNB user:

    I LOVE the mobile app and have been using it since January; but, even with the update last month, they do not tell you that some drive-thru Starbucks will refuse to take your mobile payment.  Those that don’t say it is a corporate mandate because of the liability of damage to the phone if dropped.  Just a little chink in the otherwise flawless expectation from this company.




    On the subject of law changes that could make it possible for horse meat to be sold legally in this country for human consumption, one MNB user wrote:

    Horses are not bred for meat in this country….it is akin to eating unwanted cats and dogs because they are not cared for. 

    I've actually ridden some escapees from the kill pen.  I worked as a riding instructor in a large successful stable, and if the friendly horse killers noticed some likely prospects for school horses among their purchases, they would bring them to the stables for us to try.  Our endorsement meant an escape from the abattoir.

    There are in fact, too many horses in this country.  Tens and tens of thousands of Thoroughbred racehorses that don't become winners are dumped every year on a market that now relies on Warmbloods and other breeds for the elite show jumpers.  In fact, even some great stars of the track, like Ferdinand, a Kentucky Derby winner, wind up slaughtered when they can no longer produce stakes winning progeny.

    My mother worked as a bookkeeper on a Virginia horse farm during WWII, near Newport News where my father was stationed.  One of the elderly residents of the barn turned up for dinner one night…on a plate.  Peace Pan was lovingly toasted and praised by the family and then greatly enjoyed.  Somehow that always seemed fitting.  But Peace Pan didn't spend the last hours of his life in terror.


    In my comment on this story, I wrote, in part:

    I hear horses, I think Trigger. Silver. Seabiscuit. Man O’War. Phar Lap. Not to mention the horses my daughter rides on Sundays. I simply cannot imagine eating one.

    Other than the Borden’s mascots, how many famous cows are there?


    I got dozens of emails responding to this, most of them mentioning one specific set of cows ... the cows mentioned at the end of this highly detailed email from MNB user Mike Franklin:

    Are you kidding me??? There have been famous cows all throughout history…and cows have a great sense of humor! And what about the cow that jumped over the moon?????
     
    1.     Achelous - Greek river god who, while fighting Hercules in the form of bull, had one of his horns broken off which was later made into the Cornucopia.
    2.    Babe (Blue Cow) – Paul Bunyan’s Cow.
    3.    Laughing Cow - Red cow used by Bel to market Laughing Cow cheese. The cow has a long history.
    4.    Milka Cow - Purple cow used for marketing chocolate as modestly presented on the German Milka website.
    5.    Minotaur - Half bull/half human son of Minos's wife and a white bull given to Minos by Poseidon.
    6.    Mrs. O'Leary's Cow - A cow belonging to Mrs. O'Leary which allegedly started the great fire of Chicago.
    7.    Nandini - The Hindu cow of plenty.
    8.    South Park Cows - The name of the World Dodgeball Championship winning team from South Park who beat the reigning Chinese champions in episode 205
    9.    Taurus - The name used by Zeus when he took the shape of a white bull to seduce Europa.
     
    And what about the, “Eat Mor Chiken” Cows – they even parachute into football games, however they spell horribly.


    I’m sure there are some udder ones, too. Thanks for raising my consciousness. (Achelous? Really?)




    And finally, from MNB user Debra K.W. Topham:

    Thanks, Kevin for a great movie recommendation to The Descendants!  Your commentary was on target.

    My pleasure. Really.

    (In so many ways, I seem to get the most pleasure when people like my movie, book, beer and wine reviews.)
    KC's View: